 WHAT IS THE PRICE OF PAY-TO-DELAY DEALS?Journal of Competition Law and Economics, 2013, vol. 9, issue 3, 739-753 Abstract: When a branded drug manufacturer makes a payment to a potential entrant to delay generic entry, it raises anticompetitive concerns. In this article, I highlight one such deal in a subsegment of drugs used to treat attention deficit hyperactivity disorder (ADHD)—mixed amphetamine salts (MAS)—and compute market equilibrium prices under three counterfactuals. In the first case, equilibrium prices are computed as if all MAS drugs were produced by a single profit-maximizing firm, while in the latter two counterfactuals, I compute equilibrium prices as if either an immediate-release generic or an extended-release branded drug were not available in the market. The simulations show that the average percentage increase in drug prices is 4 to 4.5 times larger in the latter two cases (when one of the drugs is not available in the market) compared with a simple joint profit maximization of the same products. In this respect, the challenges by the Federal Trade Commission (FTC) to the so called “pay-to-delay” deals and the recent legislations introduced into the Congress to ban such deals are justified. JEL-codes: I11 K21 L41 (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:oup:jcomle:v:9:y:2013:i:3:p:739-753. Access Statistics for this article Journal of Competition Law and Economics is currently edited by Nicholas Economides, Amelia Fletcher, Michal Gal, Damien Geradin, Ioannis Lianos and Tommaso Valletti More articles in Journal of Competition Law and Economics from Oxford University Press |
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